Poll tax on immigrants could generate $1 billion a year for infrastructure and services

09 March 2017

A tax expert is calling for the introduction of a poll tax on immigrants to help fund the extra infrastructure and public service costs associated with New Zealand’s growing population.

A poll tax is a duty imposed on all, or a particular category of persons, to fund a specific government expense. Mark Keating, a senior lecturer in tax law at The University of Auckland Business School, argues the Government should impose a flat levy on most immigrants to New Zealand to help cover the extra infrastructure and service costs from population increase.

In 2016, New Zealand Treasury estimated the extra spending required on hospitals, schools, roads and other infrastructure to cope with population growth - which is largely driven by immigration - at $100 billion dollars over 10 years.

The Treasury figures included:

an upfront $1 billion on a Housing Infrastructure Fund to help local government pay for water, roading and other infrastructure

an additional $530 million over six years to be spent on expanding and redeveloping 30 schools

No one appears to have quantified the increased health costs yet.

“These figures suggest that New Zealand’s existing population of taxpayers will shoulder a huge additional tax bill to settle and assimilate its record number of new immigrants,” says Mr Keating.

“New Zealand is a desirable country with excellent infrastructure and public services,” he says. “Immigrants get to share in all these benefits, so why shouldn’t immigrants also contribute to them?”

Immigration New Zealand statistics show that demand for New Zealand visas consistently out-strips supply, he says.

“The laws of economics dictate that the market would set a price for what fee would-be immigrants might pay to join our club.”

Mr Keating suggests a flat immigration fee of $10,000-$15,000 per immigrant would provide a source of additional revenue to offset increased costs. He says there would have to be exceptions for some categories of immigrants (such as refugees or those filling skills shortages).

“But imposing a tax on most other migrants in return for their right to share in everything New Zealand has built up would be both reasonable and fair.”

In the year to January, there were 89,670 permanent and long-term arrivals to New Zealand, excluding refugees, Australians and returning New Zealanders. At $10,000 per arriving person, that would generate $896,700,000. At $15,000 per migrant, it would total $1.345 billion.

Mr Keating points to other instances where the Government already imposes fees and charges on immigrants. In 2015 the Government reintroduced arrival taxes on non-residents of $22 to help fund tourism infrastructure. The Green Party continues to advocate a larger fee be imposed on visiting tourists to pay for environmental projects.

Australian tax academics are also calling for the re-introduction of a poll tax in Australia to compensate the Australian Government for the additional costs of enhancing the infrastructure necessary to cope with the new arrivals. Australia has recently imposed a partnership visa fee of AUD6865 on all spouses who qualify to join immigrants in Australia.

“At present, our Government simply gives away New Zealand residency - and passes the increased cost of building the necessary infrastructure on to current residents. Rather than continuing to be too squeamish about charging immigrants for residence or citizenship, perhaps we should embrace the idea and tax them appropriately.”

He acknowledges the negative historic association of past poll taxes on immigrants.

Under the Chinese Immigrants Act of 1881 New Zealand (like other former British colonies) imposed a “poll tax” on all Chinese immigrants. At its peak, the tax was £100 a person (equivalent to approximately $17,000 today). The poll tax allowed otherwise “undesired” immigrants to buy their way in to New Zealand in return for paying a fee to the Government. It was eventually scrapped in 1944, and the New Zealand Government rightly apologised to the Chinese community in 2002.

“Obviously targeting poll tax on racial grounds is indefensible,” says Mr Keating. “But shorn of its racial over-tones, what is wrong with taxing all would-be immigrants regardless of which country they come from for the right to move to New Zealand?”